Why Welfare Reform Worked

WASHINGTON -- President Bill Clinton signed the Personal Responsibility and Work Opportunity Reconciliation Act of 1996, better known as "welfare reform,'' on Aug. 22, 1996. A decade later, it stands as a rarity: a Washington success story. It did not succeed in the utopian sense of eliminating all poverty or family breakdown. It succeeded in a more practical way. It improved life modestly for millions of people and showed that government could orchestrate constructive change. There are small and large lessons in this. The small lessons involve poverty; the large lessons involve politics.

One little-known fact is that we have made gains against poverty in recent decades -- and welfare reform deserves some credit. The poverty rate among blacks has fallen sharply, though it's still discouragingly high. From 1968 to 1994, it barely budged, averaging 32.4 percent. By 2000 it was 22.5 percent. (The poverty rate is the share of people living below the government's poverty line, about $19,500 for a family of four in 2004.) Similarly, there have been big drops in child poverty. Since 1989 the number of children in poverty has fallen 12 percent for non-Hispanic whites and 14 percent for blacks.

The economic boom of the 1990s explains much of this improvement. But it is not the whole explanation, because even after the 2001 recession, many poverty rates stayed well below previous levels. For all blacks, it was 24.7 percent in 2004.

The 1996 law replaced Aid to Families With Dependent Children (AFDC) -- traditional welfare -- with Temporary Assistance for Needy Families (TANF). Congress created AFDC in 1935 as part of the landmark Social Security Act, which also included unemployment insurance and old-age assistance. In an era when few women worked, AFDC was intended to provide modest income support for widows and their children. By the 1980s, it had evolved into something else: guaranteed payments for single, often never-married mothers. Critics argued that the program bred dependence, weakened self-reliance and rewarded out-of-wedlock births.

TANF set new rules. It eliminated the automatic entitlement to benefits. To qualify, mothers had to look for work, take job training or both (states set exact requirements). There was a general five-year lifetime limit on receiving benefits.

In a new book, "Work Over Welfare,'' Brookings Institution senior fellow Ron Haskins -- a top Republican congressional staffer during the welfare debate -- cites much evidence of success. Welfare caseloads have plunged. From August 1996 to June 2005, the number of people on welfare dropped from 12.2 million to 4.5 million. About 60 percent of mothers who left welfare got work. Their incomes generally rose. Many qualified for the federal Earned Income Tax Credit, which subsidizes low-income workers. Finally, there were intangible benefits: work connections, self-respect.

One lesson is that what people do for themselves often overshadows what government does for them. Since 1991, for example, the teen birthrate has dropped by a third. The mothers least capable of supporting children have had fewer of them. Welfare reform didn't single-handedly cause this. But it reinforced a broader shift in the social climate -- one emphasizing personal responsibility over victimhood.

Of course, poverty endures. Some mothers are unemployable and are worse off without continuous welfare. Even those with low-paying jobs often depend heavily on other government benefits, mainly food stamps and Medicaid (health insurance). And one reason that poverty hasn't decreased more is an unending inflow of poor immigrants. Unlike non-Hispanic whites and blacks, Hispanics are the only major ethnic or racial group with more children in poverty over the last 15 years. Since 1989 the increase is 58 percent.

So: we've made a stubborn problem a bit more manageable. It's pragmatic progress, not a panacea. Why can't we do the same for other pressing problems -- energy, immigration, retirement spending (Social Security, Medicare)? Here, welfare reform's political lessons apply.

One is the need to overcome a bias against change. We underestimate people's ability to adapt. In 1995, one think tank forecast that the welfare bill would throw 1 million more children into poverty. If Congress had listened, little would have happened. Today we could gradually raise Social Security and Medicare eligibility ages without causing a social catastrophe. Another lesson is the virtue of candor. Welfare's flaws were openly acknowledged. If we aren't more honest about other problems, they will simply get worse (as they already have).

The final lesson is the value of some bipartisanship. Although welfare reform was mainly a Republican project, President Clinton (who had pledged to "end welfare as we know it'') provided general support, as did many Democrats who voted for the final bill. All agreed that the system was broken. Bipartisanship makes big changes in policies more acceptable to the public by signaling a broad consensus. But in today's poisoned and polarized climate, bipartisanship is almost a relic.